Wilson Says Welfare System Is Chasing Jobs Out of State : Government: Governor sees the issue as a choice between a healthy business climate and an overly generous relief program that keeps forcing higher taxes.

Gov. Pete Wilson contended Monday that California's costly welfare system is chasing jobs out of the state and will continue to chase them unless his reforms are accepted.

The governor sought to frame the issue as a choice between a healthy business climate and an overly generous welfare program that keeps forcing higher taxes on job-producers.

Last week, in his State of the State address, he emphasized a different tack, warning that the financing of education is being threatened by runaway welfare costs.

Thus, as he begins campaigning for his November ballot initiative that would sharply cut welfare and give him more power over the state budgeting process, the Republican governor is pitching it as an "us vs. them" proposition. The "us" refers to the majority of society, the workers, the schoolchildren, the employers; and "them" refers to welfare recipients.

Wilson also made it clear during various appearances in Los Angeles on Monday that he would be pushing for welfare cutbacks even if state government were not facing another severe revenue squeeze.

But the recession, coupled with the invariable shortfall in tax revenues it produces, probably is providing the political opportunity to permanently pare welfare benefits, the governor conceded.

Wilson went on the road with his campaign for welfare reform, speaking to groups of journalists and a business group in the San Fernando Valley.

His basic message that "California state government is running up a bill that California taxpayers can't afford" found a receptive audience among the 200 business executives attending a luncheon sponsored by the Valley Industry and Commerce Assn. in Woodland Hills.

Trying to associate his ballot proposal with one of the most popular initiatives in California history--the property tax-cutting Proposition 13 of 1978--Wilson asserted that "what (Proposition 13 sponsor) Howard Jarvis did for California homeowners, we must now do for . . . California's taxpayers, for California jobs and for California's (school) children."

Addressing the business group, Wilson used his strongest language in recent weeks to denounce the thought of another tax increase. "We must pledge there will be no taxes in addition to those that are now burdening California taxpayers or we risk driving even more jobs out of the state," he said, referring in part to the $7.6 billion in tax hikes he signed last summer in order to close a $14.3-billion revenue gap.

He declared that "California's business climate is in desperate need of improvement." Earlier, meeting with editors and reporters of The Times, the governor gave a particularly bleak description of the state's business climate. Talking about efforts to attract businesses from out of state, he said: "I believe in merchandising California, but you can't sell a bad product."

Speaking to the Valley group, Wilson tied his anti-welfare, anti-tax and pro-business messages into a pitch for his November ballot measure, which he calls the "Taxpayers Protection Act."

"Runaway spending is not just unfair to the California taxpayer, it is unfair to California job seekers," he said. "Employers leave this state fleeing both the present burden of taxation and the ever-present threat that autopilot spending will make that tax burden even heavier. Unless we act now, that burden of taxation is threatened with growing heavier.

"California will lose more jobs unless we work to provide fundamental reform to the business climate. Part of that is fundamental budget reform and control of state spending. That reform is the California Taxpayers Protection Act."

Wilson's message was well-received by the business group. During the last year, as California has suffered from the national recession, the organization's membership has dropped from 300 companies to 280 while some firms have gone out of business or left the state. The number of employees represented by these companies has fallen from 100,000 to 90,000 as workers have been laid off or vacancies not filled.

Attorney David Fleming, past chairman of the association, said "there's no question" that the majority of members will support Wilson's proposal at the ballot box.

But spokesman Laurie Golden said the "No. 1 concern" of these executives is the costly workers' compensation system, which seeks to compensate workers hurt on the job. Wilson drew his loudest applause when he reasserted that the system needs to be reformed.

Later, the governor told reporters he will send the Legislature a proposed reform in workers' compensation this spring, after a package is developed by his newly created Council on California Competitiveness, chaired by former baseball Commissioner Peter V. Ueberroth.

Under Wilson's proposed welfare reforms, some families' benefits would be cut by 25%. There would be an immediate 10% reduction in grants for those on the huge Aid to Families With Dependent Children program. And there would be another 15% cut after six months for families with an able-bodied adult in the house. People could earn up to $190 per month without losing welfare benefits.

Teen-age mothers would have a $50-per-month incentive to stay in school--and a $50-per-month penalty if they dropped out. But they would only receive AFDC benefits if they lived with their parents or legal guardian.

Also, families moving into California from out of state--for their first year here--would be eligible only for the same AFDC benefits they could have received in their former state.

"The bottom line is, I'm trying to stop California from being a welfare magnet," the governor said repeatedly on Monday. He also emphasized that the elements of his plan are things he believes in--budget deficit or not.